Delayed Spring Market
The last eight months has seen the property market jump in leaps and bounds and the industry has grappled with numerous, almost too many to count lockdowns with number 6.0 being the most hard felt amongst industry peers and buyers to date.
With the Spring market upon us, traditionally a time when we see an increase in properties come to the market with buyers being offered more choice and time to make informed decisions, however this year we are likely to see scrambling to get a look in with significantly reduced campaign times.
We’ve seen a large number of properties with auction dates being pushed back and with many others pulled from the market only to be rescheduled once restrictions are eased. What hasn’t changed however are the number of buyers willing to make standout offers for properties whilst running the gauntlet with sight unseen offers, of which, many vendors and agents are facilitating. This strategy is fraught with danger and one which we do not recommend unless a special condition can be added to the contract of sale allowing the buyer to safely withdraw from the sale once they have inspected the property and deemed not suitable.
All is not doom and gloom however as we still expect there to be an increase in volume in the next few months leading up to Christmas but there won’t be an oversupply because buyer demand remains strong. Of course this will be dependent on how long we remain in lockdown for.
Whilst we may not be in a position to physically inspect properties, we remain active with sourcing quality homes and negotiating with agents during this lockdown period to be able to put our clients front and centre for when restrictions are lifted, we are first at the gate!
Lockdown periods are a good time to take stock and reassess your strategy if you are still looking at buying. Unprepared or indecisive buyers will be caught off guard by the sheer speed at which properties will be sold.
Lower Prices?
The basics of supply and demand would suggest that as more property become available and scarcity drops a slight softening of prices is expected, however with an increase in buyer activity still surpassing the levels of stock, we remain confident that we will continue to see some very strong results and heated competition.
What has become apparent however is that affordability constraints are starting show.
According to Dr Nicola Powell – Domain Chief of Research and Economics, buyer demand Nationally has come off its peak and not as prevalent as it was back in March resulting in soaring house prices and the easing of demand being a direct result of the impact of affordability woes for many buyers, not limited to just first home buyers.
The Domain Buyer Demand Indicator (BDI) measures search behaviour on domain.com.au to identify active buyers who are more likely to purchase, such as those who shortlist a home or send an inquiry. It tracks changes in demand over time and also the state of the late winter market. This report suggests that Melbourne buyer demand is now at 10 per cent higher than average at this time of year amid pent-up demand from buyers who still have not been able to secure their home with buyer demand up 20 per cent in the inner south, 13 per cent in the inner suburbs and 10 per cent in the inner east.
Westpac’s Quarterly Housing Pulse, released on Tuesday, showed the ‘time to buy a dwelling index’, revealing that people’s plan to buy a home and whether now is the best time to buy – was at its second-lowest point since 2010. The blame, surging prices and stretched affordability.
Even with the recorded change in sentiment, buyers are increasingly sourcing the advice and services of buyer’s agents as Sydney and Melbourne have both recorded an increase in enquiry levels. Serious buyers are still very keen to enter the property market irrespective of the market conditions or possibility of softening prices.
Lockdown Lessons
The property market during these lockdowns if observed from a distance who have anyone thinking ‘how could this be’? We’ve seen both sales and listing volumes decrease with each lockdown only to snap back with gusto once restrictions are lifted. The past twelve months have seen demand outweighing supply creating extremely strong selling conditions with newly advertised stock recovering remarkable quickly.
A snapshot of what stock levels looked like with each lockdown and the trend coming out of lockdown gives a clear picture of the volatility of supply but not demand. This is a rolling 28-day count of new listings for 2020 and 2021 that have been added to the market over the year, compared to the previous five year average.
The second half of 2020 shows the rapid falls in new listings being added to the market, a time when new listings would be on the rise. At its lowest count, only 1,411 listings were added to the market for sale in the four weeks to September 6th, which was 80.7% below the previous five-year average.
With the easing of restrictions toward the end of October 2020, new listings volumes increased rapidly and new listing volumes in December of 2020 surpassing the previous five year indicating that the missed Spring season of 2020 had been pushed back.
New listing numbers in 2021 are higher than that of 2020 which may be as a direct result of vendors holding off from selling their property until more certainty surrounding COVID could be obtained.
A similar trend can be seen now and showing signs of a repeated delay to the Spring season. Whether we see more balance between consumer activity and supply, only time will tell, however with affordability constraints becoming more evident and talks of tighter credit conditions further down the track on the cards, we could see a more balanced playing field once again.
CoreLogic Insights
CoreLogic data showed Australian dwelling values rose 16.15% in the twelve months to July 2021, the highest annual growth rate since February 2004. The rolling 28-day growth rate in CoreLogic Home Value index continues to show a loss of momentum in growth across all capital cities.
Tim Lawless – Research Director at CoreLogic is also quoted as saying, “The 16.1% lift in national housing values over the past year is the fastest pace of annual growth since February2004, however the monthly growth rate has been trending lower since March this year when the national index rose 2.8%.”
Melbourne dwelling values increasing by 1.3% in July with dwelling values increasing by 4.6% in the quarter and remain at the highest on record.
Auctions
A sudden surge in auction withdrawals across Melbourne has resulted in a rather significant clearance rate drop since July 2020.
There were 1,067 auctions listed to be held across Melbourne this week and over the previous week, 884 homes were listed to be taken to auction, whereas 222 auctions were held this time last year.
Of the 792 results collected so far, 49.9 per cent were withdrawn, resulting in the preliminary clearance rate of 48.6 per cent. Sold results collected so far show that 69.4 per cent were sold prior to auction. In comparison, 32.6 per cent of auctions were withdrawn over the previous week and a final auction clearance rate of 59.9 per cent has been recorded.
REIV figures saw July 2021 had a reported 3361 auctions with a total of 2833 of these sold representing a clearance rate of 84.3% which is the highest number of auction sales for any July month. Thirteen suburbs across Melbourne saw a recorded 100% clearance rate, led by Greenvale, Hampton and Brighton.
At a suburb level, Reservoir continues the trend with the greatest number of reported auctions for the month at 72 followed by Craigieburn (63) and Preston (53). with a reported 47 auctions.
Property Management Update
The beginning of “Lockdown 6” in Victoria was (ironically) the 6th of August and continues to impact our lives in terms of the health challenges related to the COVID-19 pandemic.
The restrictions have challenged most industries and Property Management is no exception. As always, when facing challenges with a positive mindset, there is the opportunity to change our way of thinking about how we can continue to deliver results for our clients and maintain quality service delivery outcomes.
Our Property Management team pivoted swiftly to embrace remote working processes, made easier with the continued use of the most up to date cloud-based technology we have invested in, at Buyers Advocate. Continuity of service during stressful times is critically important not only for our Residential Rental Providers but also for our renters. In an environment of high pressure, our team prides itself on going the extra mile to provide genuine care and a “human face” to Property Management. We enjoy building trusted and supportive relationships with our clients, as well as the many trades and suppliers we deal with daily. It truly is a collaborative effort! We would like to pass on our sincere appreciation for your loyalty and acknowledge that long term partnerships are the foundations of future success. Indeed, we are all in this together.
The current restrictions unfortunately do not allow for private inspections or open home inspections. We are also not permitted to attend properties for routine inspections. In fact, the only tasks we are permitted to action are those required to facilitate start and end of lease activities – and urgent maintenance.
This is obviously less than ideal for the handful of clients who currently have vacant properties. To maintain activity in leasing your properties during lockdown, we continue to engage with prospective renters and encourage rental applications by sending a video tour and reference checking, to secure pre-approval to lease a property. If they are interested in moving into the property “sight unseen” we are able to facilitate this, as moving in and out of a property is a permitted activity. We remain hopeful that restrictions will start to ease soon and look forward to an influx of inspection enquiry and activity, as we experienced immediately after the previous lockdown.
On a positive note, we continue to streamline our internal processes to find new ways to improve efficiencies. If you have any feedback or suggestions regarding our service or require further information which you may find useful (whether it be in relation to the new renting laws or legislation) our Head of Property Management, Rachel Atkin, is available to meet with you over Zoom.
Stay safe and well and please look after yourself and your loved ones – and remember, if you need to reach out to speak to someone, the team at Buyers Advocate are here for you.
Property Management Update
The beginning of “Lockdown 6” in Victoria was (ironically) the 6th of August and continues to impact our lives in terms of the health challenges related to the COVID-19 pandemic.
The restrictions have challenged most industries and Property Management is no exception. As always, when facing challenges with a positive mindset, there is the opportunity to change our way of thinking about how we can continue to deliver results for our clients and maintain quality service delivery outcomes.
Our Property Management team pivoted swiftly to embrace remote working processes, made easier with the continued use of the most up to date cloud-based technology we have invested in, at Buyers Advocate. Continuity of service during stressful times is critically important not only for our Residential Rental Providers but also for our renters. In an environment of high pressure, our team prides itself on going the extra mile to provide genuine care and a “human face” to Property Management. We enjoy building trusted and supportive relationships with our clients, as well as the many trades and suppliers we deal with daily. It truly is a collaborative effort! We would like to pass on our sincere appreciation for your loyalty and acknowledge that long term partnerships are the foundations of future success. Indeed, we are all in this together.
The current restrictions unfortunately do not allow for private inspections or open home inspections. We are also not permitted to attend properties for routine inspections. In fact, the only tasks we are permitted to action are those required to facilitate start and end of lease activities – and urgent maintenance.
This is obviously less than ideal for the handful of clients who currently have vacant properties. To maintain activity in leasing your properties during lockdown, we continue to engage with prospective renters and encourage rental applications by sending a video tour and reference checking, to secure pre-approval to lease a property. If they are interested in moving into the property “sight unseen” we are able to facilitate this, as moving in and out of a property is a permitted activity. We remain hopeful that restrictions will start to ease soon and look forward to an influx of inspection enquiry and activity, as we experienced immediately after the previous lockdown.
On a positive note, we continue to streamline our internal processes to find new ways to improve efficiencies. If you have any feedback or suggestions regarding our service or require further information which you may find useful (whether it be in relation to the new renting laws or legislation) our Head of Property Management, Rachel Atkin, is available to meet with you over Zoom.
Stay safe and well and please look after yourself and your loved ones – and remember, if you need to reach out to speak to someone, the team at Buyers Advocate are here for you.
Recent Purchases
The challenging market conditions continue just as we continue to deliver great results for our clients. Here are a few below:
Home purchase – Blackburn
Purchased a stylish renovated 2 bed, 2 bath, double garage villa unit, 1 of 2 only in a sought-after tree lined pocket of Blackburn close to train & amenities. The purchase was made via a new online auction platform with bids limited to time of 3 minutes and then 2 minutes and ultimately was purchased after pre and post auction clarity and confirmation of the rules. A well timed and executed strategy delivered a favourable result, one which would not have been achieved at that price point should the property have been sold via a traditional campaign with on street auction. A win for our client.
Investment purchase – Glenroy
After inspecting this property prior to it hitting the market, Buyers Advocate “shot to kill”. We had to secure this property before Auction and prior to the other buying competition getting word of it, in order to buy it at a reasonable pricing level. With good questioning technique and carrying out all due-diligence over-night, we were able to secure this unique investment property, for our clients SMSF the next day. With a lovely 206sqm single level footprint, west facing courtyard garden and only minutes walk to shopping and transport, this property will be a high performer for years to come.
Tip Of The Month: Negotiations
Know what outcome you want before you start the negotiations
Having a clear picture of what result you want will mean that the agent won’t be able to sway your decision. Be prepared to have some flexibility.
Understand the vendors motivation
Not all vendors are motivated purely by dollars, some it’s settlement terms so knowing this before you proceed with the negotiations will enable you to form a clear strategy.
Know who your competition is
Find out as much as you can on who else is interested in the property, their profiles, how interested they are and if they’ve missed out before. Information on your competition will give you a clearer picture of where you need to be.
Confirm the process
Understand what the agents process is in terms of what comes next. There is no point in negotiating a deal only then to find out that they will use this information to shop for a better deal.
Walking away
Negotiations can stall and if this happens, be prepared to walk away if the deals is not reasonable, know your limits and don’t get emotionally attached.
